From NYC CollegeLine:
Boys and girls, planning is good. Lying is bad. Once folks have access to the right information, choosing to misrepresent their household, income, or assets puts them on a slippery slope. In my experience, people often get away with these misrepresentations. With financial aid counselors being called upon to be a part detective and part tax vigilante (No judgment—I know it’s their job!), misrepresentations can be hard to keep up. I haven’t heard of anyone being hauled off to prison for lying on a financial aid form but folks do get caught. When they do, they can be banned from receiving any more aid and will most likely be asked to repay the aid they received.